Question: Paymaster Enterprises has arranged to finance its seasonal working capital needs
Paymaster Enterprises has arranged to finance its seasonal working-capital needs with a short-term bank loan. The loan will carry a rate of 12 percent per annum with interest paid in advance (discounted). In addition, Paymaster must maintain a minimum demand deposit with the bank of 10 percent of the loan balance throughout the term of the loan. If Paymaster plans to borrow $100,000 for a period of three months, what is the annualized cost of the bank loan?
Relevant QuestionsCalculate the annualized cost of the following trade credit terms, when payment is made on the net due date (assume a 360-day year).a. 2/10, net 30b. 3/15, net 30c. 3/15, net 45d. 2/15, net 60If a firm buys on trade credit terms of 2/10, net 50 and decides to forgo the trade credit discount and pay on the net day, what is the annualized cost of forgoing the discount (assume a 360-day year)?Compute the Canadian dollar/yen and the yen/Swiss franc spot rate from the data in the preceding table.Selling quotes for Foreign Currencies in newYorkYou are in need of Swiss (Switzerland) francs in six months, but before entering a forward contract to buy them, you would like to know their premium or discount if the spot rate is 0.9772 and the forward six-month rate is ...The Specialty Chemical Company operates a crude oil refinery located in New Iberia, Louisiana. The company refines crude oil and sells the by-products to companies that make plastic bottles and jugs. The firm is currently ...
Post your question